The coalition government has confirmed that the default retirement age of 65 is to be abolished on 1 October 2011. This means that the last date an employer can give notice of intention to retire an employee who is approaching or has reached their 65th birthday is 30 March 2011.
It will also be possible to issue notices between 1 and 6 April 2011 but a penalty will be payable as the required six months notice will not have been achieved.
After 1 October 2011, an employer will only be able to justify a compulsory retirement age in limited circumstances and the legal test is likely to be difficult to pass. Lawspeed recommends that employers remove their compulsory retirement age and amend employment contracts and/or policies to reflect this.
Employers will be able to discuss long-term career plans with employees. Acas recommends this is done with the entire workforce as part of any regular reviews; however it may be acceptable to focus on the over-60s for such discussions as long as this is handled fairly and the options are discussed openly by both parties. Employers will need to consider alternatives to manage their workforce by considering job sharing, reduced or flexible hours for employees or changing roles and responsibilities. Employers can still dismiss employees on the grounds of poor performance provided the correct procedure is followed.
The government will provide a general exemption in respect of work place insured benefits so it will not be age discriminatory to refuse to pay for insurance to older workers where the cost is too high.
The government is set to issue guidance on the abolition of the compulsory retirement age later this year, however, what is clear is that claims of age discrimination are likely to increase overall and employers should be considering re-drafting contracts and policies ready for issue before October to reduce this risk.